Down Payment

Business, Legal & Accounting Glossary

Definition: Down Payment


Quick Summary of Down Payment


A lump sum cash payment paid by a buyer when he or she purchases a major piece of property, such as a car or house. The buyer typically takes out a loan for the balance remaining, and pays it off in monthly installments over time.




Full Definition of Down Payment


A down payment is the amount paid in advance of delivery of the purchased good or service, usually to demonstrate good faith. A down payment can be associated with any kind of purchase. In real estate, the term down payment takes on a slightly different meaning. The good faith down payment in the usual sense is instead called earnest money, a contract deposit, or something similar, with the term down payment referring instead to the amount contributed at closing by the financing buyer. The size of a down payment on real property is a good measure of the risk of default for the lender. The larger the down payment, the less likely the borrower is to default on a mortgage given the size of the loss the buyer would incur. The minimum down payment is thus an important characteristic of most mortgage products.


Cite Term


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Page URL
https://payrollheaven.com/define/down-payment/
Modern Language Association (MLA):
Down Payment. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. September 20, 2021 https://payrollheaven.com/define/down-payment/.
Chicago Manual of Style (CMS):
Down Payment. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/down-payment/ (accessed: September 20, 2021).
American Psychological Association (APA):
Down Payment. PayrollHeaven.com. Retrieved September 20, 2021, from PayrollHeaven.com website: https://payrollheaven.com/define/down-payment/

Definition Sources


Definitions for Down Payment are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 22nd April, 2020 | 7 Views.